AN ACT
to create an emergency program to reduce foreclosures and to appropriate funds
to enhance housing counseling in this state, prevent foreclosures of subprime
loans, stimulate the housing market, and provide continued support of the
housing finance agency.

The General Assembly of North Carolina enacts:

SECTION 1. Chapter 45 of the General
Statutes is amended by adding a new Article to read:

"Article 11.

"Emergency Program to Reduce Foreclosures.

"§ 45-100.
Title.

This Article shall be known as the 'Emergency Program to
Reduce Foreclosures Act.'

"§ 45-101.
Definitions.

The following definitions apply throughout this Article:

(1)Mortgage
servicer. - A person who is in the business of receiving any scheduled periodic
payment from a borrower pursuant to the terms of any loan, including amounts
for escrow accounts, and making the payments of principal and interest and such
other payments with respect to the amounts received from the borrower as may be
required under the terms of the mortgage servicing loan document or servicing
contract.

(2)Qualifying
loan. - A mortgage loan with all of the following characteristics:

a.The
property securing the loan is occupied by the mortgagor at the time of the submission
required in G.S. 45-102 as the mortgagor's principal residence.

b.The
loan is a subprime loan.

c.The
mortgagor has not received assistance under the Home Protection Pilot Program
administered by the North Carolina Housing Finance Agency.

d.The
mortgagor has not previously received assistance under this Article for a prior
delinquency.

e.Efforts
by the Commissioner of Banks to encourage communication have a realistic
likelihood of preventing foreclosure as determined by the Commissioner.

(3)Recently
originated. - A subprime loan originated on or after January 1, 2005.

(4)Subprime
loan. - A loan that would meet the definition of a rate spread home loan under
G.S. 24-1-1F(a)(7), if that section had been in effect when the loan was
originated. A mortgage servicer may rely on a chart reflecting the appropriate
interest rate triggers for rate spread home loans for each day of the period
covered by this Article provided by the Commissioner of Banks for the purposes
of determining if a loan is a subprime loan covered by this Article.

"§ 45-102.
Creation of database of subprime loans facing foreclosure.

No later than September 1, 2008, the Commissioner of Banks
shall create a database comprised of qualifying loans in which a foreclosure
filing is reasonably anticipated as described in G.S. 45-103. The
Commissioner shall utilize this database in order to encourage communications
between mortgage servicers and willing homeowners.

"§ 45-103.
Submission of information to the database.

Mortgage servicers of recently originated subprime home
loans shall submit information required by the Commissioner of Banks to the
database created pursuant to G.S. 45-102 at least 30 days prior to the
institution of any foreclosure proceeding. The Commissioner shall use the
information to determine if a loan is a qualifying loan. The Commissioner shall
publicly provide the form, manner, and content of the filing no later than 30
days prior to the date the database becomes active.

"§ 45-104.
Assistance for qualifying loans.

In the case of a qualifying loan, the Commissioner of
Banks shall notify the mortgage servicer, the homeowner, and other parties, as
appropriate, that the loan is a qualifying loan and shall make efforts to
facilitate communication between the parties to avoid foreclosure. The mortgage
servicer shall not institute foreclosure proceedings for at least 60 days after
receiving notice that the loan is a qualifying loan, in order to allow the
parties to determine if there is an alternative to foreclosure.

"§ 45-105.
Notification.

For loans that are not qualifying loans, the Commissioner
of Banks shall notify the holder, or the mortgage servicing agent of the
determination that the loan is not a qualifying loan within 30 days of the
receipt of the initial notice required by this Article so as not to disrupt
foreclosure proceedings for loans not receiving assistance under this program.

"§ 45-106.
Emergency powers of the Commissioner of Banks.

The Commissioner of Banks shall be exempt from rule making
under Chapter 150B of the General Statutes solely with regard to establishing
procedures to implement the purposes of this Article. The Commissioner may
employ agents to act on behalf of the Commissioner to accomplish the purposes
of this Article.

"§ 45-107.
Privacy of records.

The Commissioner of Banks shall protect the privacy of
personal financial information provided in accordance with this Article that is
not otherwise a public record, and such information shall not be released to
the public. A mortgage servicer shall be held harmless by the Commissioner for
any breach of privacy rights of the mortgagor with respect to the information
the mortgage servicer provides to the Commissioner in accordance with G.S. 45-103.

"§ 45-108.
Foreclosure filing.

(a)For the
duration of this program, foreclosure notices filed on or after September 1,
2008, shall contain a certification by the filing party that the loan was
properly submitted to the database as required by G.S. 45-103 and that the
loan is not currently receiving assistance under G.S. 45-104 or that the
loan is not a qualifying loan.

(b)An
inaccurate statement in the certification required by subsection (a) of this
section shall be cause for the dismissal of any foreclosure proceeding
initiated by the mortgage servicer and a payment by the filing party of costs
incurred by the mortgagor in defending the foreclosure proceeding."

SECTION 2. There is appropriated from the
General Fund to the North Carolina Housing Finance Agency the sum of one
million dollars ($1,000,000) in recurring funds for the 2008-2009 fiscal year
to provide counseling to homeowners potentially at risk of losing their homes
to foreclosure, to make grants to nonprofit counseling agencies in this State
that are designated and approved by the Agency, and to provide funding for
training of counselors where necessary as determined by the Agency. Nonprofit
counseling agencies selected by the North Carolina Housing Finance Agency shall
provide housing counseling and related services to help homeowners avoid home
loss, foreclosure, and preserve home equity.

SECTION 3. There is appropriated from the
General Fund to the North Carolina State Bar the sum of two million dollars ($2,000,000)
in recurring funds for the 2008-2009 fiscal year to make grants to legal
service providers to help prevent foreclosure and home loss, preserve home
equity among low-income consumers, and assist low-income consumers in cases
involving predatory mortgage lending, mortgage broker and loan services abuses,
and related legal issues. The following organizations shall be eligible for
grants under this section: Legal Services of Southern Piedmont, Pisgah Legal
Services, the Land Loss Prevention Project, Legal Aid of North Carolina, Inc.,
and the Financial Protection Law Center.

SECTION 4. There is appropriated the sum of
seven hundred thousand dollars ($700,000) to the North Carolina Housing Finance
Agency to be used to:

(1) Create a pilot program
in five or six geographical regions of the State by identifying a nonprofit
organization in each region to receive up to the sum of seventy-five thousand
dollars ($75,000) as a grant-in-aid to be used to create an affordable housing
council. Each affordable housing council shall be composed of persons,
nonprofits, and businesses representing all aspects of the housing market and
shall work to identify the local needs and available resources for affordable
housing as well as develop a strategic plan for increasing the amount of
affordable housing in the region.

(2) Allocate the sum of
two hundred fifty thousand dollars ($250,000) to provide professional and other
assistance to the councils, including the identification of best practices for
increasing the stock of affordable housing, market data for the region and for
the State, and coordination of the councils' efforts. The Housing Finance
Agency may also use these funds to increase public awareness of these
affordable housing councils and the actions the councils are taking to increase
the amount of affordable housing across the State.

SECTION 5. The State Treasurer shall work
with the entities listed in G.S. 147-69.1(c)(2) to develop a North
Carolina specific mortgage portfolio in which the Treasurer may invest funds
under G.S. 147-69.1(c)(2). The State Treasurer shall attempt to invest at
least one hundred million dollars ($100,000,000) in this mortgage portfolio in
order to assist with mortgage financing liquidity in this State.

SECTION 6. There is appropriated from the
General Fund to the North Carolina Housing Finance Agency the sum of two
million dollars ($2,000,000) in recurring funds for the 2008-2009 fiscal year
to provide expanded funding for the Agency's existing programs.

SECTION 7. Section 1 of this act becomes
effective July 1, 2008, and expires August 31, 2010. The remainder of this act
becomes effective July 1, 2008.